1. Can Perceptions of Property Market Volatility and Optimism Be Affected by Message Framing and Market Familiarity? Deborah Levy and Catherine Frethey-Bentham, The University of Auckland Business School, Auckland, New Zealand Changha Jin, Hanyang University, Korea ERES 2013: Vienna University of Technology 4 July, 2013

2. Introduction and Literature Review Methodology Analysis and Results Summary Outline

3. Introduction and Literature Review

4. Introduction Extant literature notes that the perceptions of individuals are influenced by context or message framing A frame can be regarded as some combination of the beliefs, values, attitudes and mental models that people adopt to apprehend and comprehend a situation The frame significantly affects how individuals infer meaning and hence understand a situation

5. Introduction Literature also identifies differences in judgements between decision makers within familiar and unfamiliar markets This study combines these two phenomena to see if media effects differ when decisions are being made by decision makers within familiar and unfamiliar markets

6. Literature Review Media Effects Price, Tewkesbury & Powers (1997), Pruitt, Reilly & Hoffer (1988), Soroka (2006) identified media effects Property Related Huge & Hoffman (2008) found a relationship between the amount and type of media coverage and public perceptions in the context of the housing market Jin & Gallimore (2010) confirmed that positive and negative framing can act to alter people’s market perceptions of the same market scenario Case & Shiller (2003) confirmed the existence of media effects and the term ‘bubble’

7. Literature Review Positive vs Negative Effects Levin (1987), Levin & Gaeth (1988) Maheswaran & Meyers-Levy (1990)

8. Literature Review Familiar and Unfamiliar markets Diaz & Hansz, 1997 - experts operating in geographically unfamiliar markets were influenced by anonymous expert opinions Diaz & Hansz (2001) - suggests that market uncertainty as reflected by geographical unfamiliarity has a role in triggering reference point anchoring Diaz Gallimore & Levy (2004) - while valuers perhaps ought to increase sales search in unfamiliar markets, this research revealed no evidence that they do so

9. Methodology

10. Study One: Novices 181 participants drawn from students completing a Bachelor of Property Degree at the University of Auckland, New Zealand All students had completed 1-17 property courses All students had at least 6 hours practical experience Experiment was carried out under the supervision of 5 researchers at lecture theatres to ensure minimum distraction and bias Samples Study Two: Experts 46 participants who were registered valuers The respondents were employees from seven companies in the Auckland area Experiment was carried out under the supervision of 2 researchers inside a room at the company premises to ensure minimum distraction and bias

11. Data Collection All respondents were asked to read a fictitious news article reporting on the reporting of “a prestigious consortium of economic forecasters” Each treatment group was provided with a description of the Auckland (high familiarity) or Atlanta (low familiarity) market framed either positively or negatively and were instructed to answer a number of questions relating to their perceptions of the market

12. Examples of Positive and Negative Framing Positive FramingNegative Framing Heading Good news for Auckland [Atlanta]: prestigious forecasting group anticipates recovery is only one year out. Heading Bad news for Auckland [Atlanta]: prestigious forecasting group anticipates recovery at least one year out. Introduction A prestigious consortium of economic forecasters with their fingers on the pulse of the global economy sees good times just ahead for New Zealand’s [the US’s] number one commercial property market. Introduction A prestigious consortium of economic forecasters with their fingers on the pulse of the global economy sees a prolonged recovery for New Zealand’s [the US’s] number one commercial property market. Within text A majority of EFC’s forecasters anticipate that the Auckland [Atlanta] commercial property market will stabilise in as little as a year. Within text A majority of EFC’s forecasters anticipate that the Auckland [Atlanta] commercial property market will not stabilise for another full year.

13. The independent variables that were manipulated in this experiment were: 1.Market Familiarity – familiar property market (Auckland) or unfamiliar market (Atlanta) 2.Message Framing – positive or negative A 2 x 2 between subjects design was implemented to investigate differences between treatment groups Experimental Design

14. Sample Sizes Novices (Students) Market Familiarity Total Familiar (Auckland) Unfamiliar (Atlanta) Framing Positive365086 Negative464995 Total8299181 Experts (Valuers) Market Familiarity Total Familiar (Auckland) Unfamiliar (Atlanta) Framing Positive 11 22 Negative 12 24 Total23 46

15. Outcome Measures The impact of Framing and Market Familiarity on a number of dependent (outcome) variables was investigated, these being: Outcome Measure Positive Outcome Measures Positive Feelings Buyer Optimism Perceptions of an Expected Rebound in the Commercial Property Market Negative Outcome Measures Perceptions of Greater Volatility in the Commercial Property Market Buyer Pessimism Belief that there is a Declining Commercial Property Market

16. Analysis and Results

17. Study One: Novices A 2 (Familiarity – Unfamiliar/ Familiar) x 2 (Framing – Negative/ Positive) between subjects design Analysis of Variance (ANOVA) used to investigate the impact of the Framing and Market Familiarity A separate ANOVA was conducted for each of the dependent variables Analysis Study Two: Experts Small sample sizes in each group meant non-parametric tests were required To investigate differences between positive and negative framing groups Mann-Whitney U tests To investigate differences for both framing and market familiarity: Kruskal Wallis tests Graphical exploration / descriptive statistics Separate analyses for each of the dependent variables

18. Hypotheses Hypotheses were formulated for each dependent variable For each dependent variable, hypotheses were formulated for the main effect of framing on the dependent variable AND the interaction effect between framing and expertise The hypothesis being that the impact of message framing is moderated by level of expertise

19. Positive Outcome Measures: Positive Feelings Novices Experts H 2 : The impact of framing on positive feelings in the short term will be moderated by market familiarity H 1 : Negative (positive) framing of the same information will decrease (increase) positive feelings in the short term in the relevant commercial property market +ve -ve

20. Positive Outcome Measures: Positive Feelings H 2 : The impact of framing on positive feelings in the short term will be moderated by market familiarity H 1 : Negative (positive) framing of the same information will decrease (increase) positive feelings in the short term in the relevant commercial property market Novices Experts

21. Positive Outcome Measures: Positive Feelings H 2 : The impact of framing on positive feelings in the short term will be moderated by market familiarity H 1 : Negative (positive) framing of the same information will decrease (increase) positive feelings in the short term in the relevant commercial property market H 1 : Supported at 5% Level H 2 : Supported at 5% Level H 1 : Not Supported at 5% Level H 2 : Not Supported at 5% Level Novices Experts

22. Positive Outcome Measures: Buyer Optimism H 4 : The impact of framing on buyer optimism will be moderated by market familiarity H 3 : Negative (positive) framing of the same information will decrease (increase) buyer optimism in the relevant commercial property market +ve -ve Novices Experts

23. Positive Outcome Measures: Buyer Optimism H 4 : The impact of framing on buyer optimism will be moderated by market familiarity H 3 : Negative (positive) framing of the same information will decrease (increase) buyer optimism in the relevant commercial property market Novices Experts

24. Positive Outcome Measures: Buyer Optimism H 4 : The impact of framing on buyer optimism will be moderated by market familiarity H 3 : Negative (positive) framing of the same information will decrease (increase) buyer optimism in the relevant commercial property market H 3 : Supported at 5% Level H 4 : Supported at 5% Level H 3 : Not Supported at 5% Level H 4 : Not Supported at 5% Level Novices Experts

25. Positive Outcome Measures: Perceptions of an Expected Rebound H 6 : The impact of framing on perceptions of an expected rebound will be moderated by market familiarity H 5 : Negative (positive) framing of the same information will decrease (increase) perceptions of an expected rebound in the relevant commercial property market +ve -ve Novices Experts

26. Positive Outcome Measures: Perceptions of an Expected Rebound H 6 : The impact of framing on perceptions of an expected rebound will be moderated by market familiarity H 5 : Negative (positive) framing of the same information will decrease (increase) perceptions of an expected rebound in the relevant commercial property market Novices Experts

27. Positive Outcome Measures: Perceptions of an Expected Rebound H 6 : The impact of framing on perceptions of an expected rebound will be moderated by market familiarity H 5 : Negative (positive) framing of the same information will decrease (increase) perceptions of an expected rebound in the relevant commercial property market H 5 : Supported at 5% Level H 6 : Not Supported at 5% Level H 5 : Not Supported at 5% Level H 6 : Not Supported at 5% Level Novices Experts

28. Negative Outcome Measures: Buyer Pessimism H 8 : The impact of framing on buyer pessimism will be moderated by market familiarity H 7 : Negative (positive) framing of the same information will increase (decrease) buyer pessimism in the relevant commercial property market +ve -ve Novices Experts

29. Negative Outcome Measures: Buyer Pessimism H 8 : The impact of framing on buyer pessimism will be moderated by market familiarity H 7 : Negative (positive) framing of the same information will increase (decrease) buyer pessimism in the relevant commercial property market Novices Experts

30. Negative Outcome Measures: Buyer Pessimism H 8 : The impact of framing on buyer pessimism will be moderated by market familiarity H 7 : Negative (positive) framing of the same information will increase (decrease) buyer pessimism in the relevant commercial property market H 7 : Not Supported at 5% Level H 8 : Not Supported at 5% Level H 7 : Not Supported at 5% Level H 8 : Not Supported at 5% Level Novices Experts

31. Negative Outcome Measures: Perceptions of a Declining Market H 10 : The impact of framing on perceptions of a declining commercial property market will be moderated by market familiarity H 9 : Negative (positive) framing of the same information will increase (decrease) perceptions that there is potential for a declining commercial property market +ve -ve Novices Experts

32. Negative Outcome Measures: Perceptions of a Declining Market H 10 : The impact of framing on perceptions of a declining commercial property market will be moderated by market familiarity H 9 : Negative (positive) framing of the same information will increase (decrease) perceptions that there is potential for a declining commercial property market Novices Experts

33. Negative Outcome Measures: Perceptions of a Declining Market H 10 : The impact of framing on perceptions of a declining commercial property market will be moderated by market familiarity H 9 : Negative (positive) framing of the same information will increase (decrease) perceptions that there is potential for a declining commercial property market H 9 : Supported at 10% Level H 10 : Not Supported at 5% Level H 9 : Not Supported at 5% Level H 10 : Not Supported at 5% Level Novices Experts

34. Negative Outcome Measures: Perceptions of Greater Volatility H 12 : The impact of framing on perceptions of greater volatility will be moderated by market familiarity H 11 : Negative (positive) framing of the same information will increase (decrease) perceptions of greater volatility in the relevant commercial property market +ve -ve Novices Experts

35. Negative Outcome Measures: Perceptions of Greater Volatility H 12 : The impact of framing on perceptions of greater volatility will be moderated by market familiarity H 11 : Negative (positive) framing of the same information will increase (decrease) perceptions of greater volatility in the relevant commercial property market Novices Experts

36. Negative Outcome Measures: Perceptions of Greater Volatility H 12 : The impact of framing on perceptions of greater volatility will be moderated by market familiarity H 11 : Negative (positive) framing of the same information will increase (decrease) perceptions of greater volatility in the relevant commercial property market H 11 : Supported at 5% Level H 12 : Supported at 5% Level H 11 : Not Supported at 5% Level H 12 : Not Supported at 5% Level Novices Experts

37. Summary

38. Summary: Main Effects (Framing) Outcome Variable Students [Positive – Negative] Valuers [Positive – Negative] Sample Mean Difference Sig. Sample Mean Difference Sig. Positive Outcomes H1H1 Positive feelings +0.8**+0.4  H3H3 Buyer optimism+0.8**+0.4  H5H5 Expected rebound +0.6**+0.4  Negative Outcomes H7H7 Buyer pessimism -0.1   H9H9 Declining market -0.4*-0.3  H 11 Greater volatility-0.4**-0.4 

39. Summary: Interaction Effects (Framing and Market Familiarity) Outcome Variable Students [Positive – Negative] Valuers [Positive – Negative] Sample Mean Difference Sig. Sample Mean Difference Sig. Positive Outcomes H2H2 Familiar: Positive feelings 0.3  +0.6  Unfamiliar: Positive feelings1.3** +0.2  H4H4 Familiar: Buyer optimism0.2  +0.9  Unfamiliar: Buyer optimism1.1** -0.1  H6H6 Familiar: Expected rebound 0.5  +0.3  Unfamiliar: Expected rebound 0.6  +0.5  Negative Outcomes H8H8 Familiar: Buyer pessimism -0.3   Unfamiliar: Buyer pessimism -0.1  +0.1  H 10 Familiar: Declining market -0.4  -0.7  Unfamiliar: Declining market -0.3  +0.1  H 12 Familiar: Greater volatility -0.5* -0.3  Unfamiliar: Greater volatility-1.3** -0.6 

40. Summary With regard to message framing … –Experts (Valuers) appear to use heuristics more in unfamiliar markets –Novices (Students) tend to use heuristics more in familiar markets Why???

41. Questions

42. Hypotheses

43. Hypotheses: Positive Outcome Measures Hypothesis H1:H1:Negative (positive) framing of the same information will decrease (increase) positive feelings in the short term in the relevant commercial property market H2:H2:The impact of framing on positive feelings in the short term will be moderated by market familiarity H3:H3:Negative (positive) framing of the same information will decrease (increase) buyer optimism in the relevant commercial property market H4:H4:The impact of framing on buyer optimism will be moderated by market familiarity H5:H5:Negative (positive) framing of the same information will decrease (increase) perceptions of an expected rebound in the relevant commercial property market H6:H6:The impact of framing on perceptions of an expected rebound will be moderated by market familiarity

44. Hypotheses: Positive Negative Measures Hypothesis H7:H7:Negative (positive) framing of the same information will increase (decrease) buyer pessimism in the relevant commercial property market H8:H8:The impact of framing on buyer pessimism will be moderated by market familiarity H9:H9:Negative (positive) framing of the same information will increase (decrease) perceptions that there is potential for a declining commercial property market in the relevant commercial property market H 10 :The impact of framing on perceptions of a declining commercial property market will be moderated by market familiarity H 11 :Negative (positive) framing of the same information will increase (decrease) perceptions of greater volatility in the relevant commercial property market H 12 :The impact of framing on perceptions of greater volatility will be moderated by market familiarity